August 13, 2012, marks the 31st anniversary of President Ronald Reagan's signing of the Economic Recovery Tax Act of 1981—which cut taxes 25 percent for all Americans.
The Reagan tax cuts are the antithesis of the Obama administration's "you-didn't-build-that" tax policies and proposals, and Young America's Foundation is highlighting this anniversary to remind the nation of the wild success of Reagan's initiatives--and why we should be emulating them now.
After the implementation of the tax cuts, the youth unemployment rate (ages 16-24) dropped 43 percent, starting as high as 18.8 percent and falling to 10.7 percent by the end of Reagan's presidency. America experienced its longest sustained period of economic growth ever, and despite cutting the top tax rate from 70 percent to 28 percent, revenues from this bracket doubled by the end of the Reagan presidency.
President Reagan signed the cuts at his presidential home, Rancho del Cielo. The Reagan’s adobe home is around 1800 square feet, and Reagan’s humble ranch reflected his governing values. He didn’t believe in an egocentric presidency or an egocentric Washington. For President Reagan, raising taxes meant that Washington knew how to best spend the people’s money.
That’s why he did the opposite. President Reagan believed in the American people, not the arrogant government. His 1981 tax cuts were the biggest in American history, and when Reagan trusted Americans with their own finances, the economy took off.
Economic output rose 15.9 percent in the ten quarters following the 1981-1982 recession. Following our last recession, output has only gone up 6 percent in the ten following quarters. The Obama administration has attempted to have government manage our current recovery, and it has failed—especially for young people.
The Obama administration has had the worst youth unemployment record since the Bureau of Labor and Statistics started keeping track in 1948. The average youth unemployment rate (seasonally adjusted, ages 16-24) under the Obama administration has been 17.6 percent. The current rate is 16.4 percent.
In what Investor’s Business Daily has dubbed "The Great Youth Depression," young Americans are yearning for more jobs and more freedom. A McClatchy-Marist poll showed 69 percent of young Americans favor tax cuts for everyone, including successful employers and businessmen--which is exactly what President Reagan did in 1981.
Young Americans who learn the history of the Reagan tax cuts know we can do better. Humble leadership which returns power back to the private sector can put America’s youth back to work.